Hello, this is attorney Lee Young-kyung of Cheongchul Law Firm.

Today we examine the Supreme Court's judgment of June 24, 2026 in case 2024Da320215 (a claim for delivery of a building). The dispute concerned whether, after the “three periods of rent arrears” requirement under Article 10-8 of the Commercial Building Lease Protection Act (상가건물 임대차보호법 제10조의8) had been satisfied, a landlord's right to terminate a commercial lease is extinguished where the tenant pays part of the rent — bringing the arrears below three periods' worth — before the landlord makes a declaration of termination through service of a copy of the complaint.

Holding – The landlord's right to terminate arises the moment three periods of rent arrears occur, and is not extinguished by the tenant's later unilateral partial payment

The Supreme Court held that, under Article 10-8 of the Commercial Building Lease Protection Act, whether “the rent arrears have reached three periods' worth of rent” is a requirement for the right of termination to arise; the moment that requirement is satisfied, the landlord's right to terminate the contract arises immediately, and it is not to be reassessed as of the time the declaration of termination reaches the tenant (the time the exercise of the termination right takes effect). Accordingly, even if, after the landlord has exercised the termination right, the tenant unilaterally pays part of the rent without the landlord's consent so that the arrears fall below three periods' worth, the landlord's right to terminate is not extinguished, absent special circumstances (such as circumstances indicating that the landlord accepted the rent without objection and thereby impliedly waived the termination right). The Supreme Court upheld the lower court judgment (Busan District Court, 2024Na46880) and dismissed the defendant's appeal.

The key points of this judgment are as follows.

● The time the three-periods-of-arrears requirement is met = the time the termination right “arises” (immediate)

● The time the declaration of termination is delivered (service of the copy of the complaint, etc.) = the time the termination right is “exercised” (the three-periods requirement is not reassessed at this point)

● Once it has arisen, the termination right is not extinguished by the tenant's later partial payment alone, absent special circumstances amounting to an “implied waiver,” such as the landlord accepting rent without objection

1. Facts

The lease relationship and the monthly rent structure

The plaintiff (landlord) leased to the defendant (tenant) approximately 132㎡ of section ① and approximately 50㎡ of section ③ shown on the attached drawing, on the first floor of the building in question (the “stores in question”), and the total monthly rent for these stores was KRW 8,800,000. Accordingly, the “three periods' worth of rent” under Article 10-8 of the Commercial Building Lease Protection Act amounts to KRW 26,400,000 (KRW 8,800,000 per month × 3).

The occurrence of rent arrears and the landlord's filing of suit

On December 13, 2022, the plaintiff filed this suit and, in the complaint, stated a declaration of termination to the effect that “the defendant's rent arrears as of November 2022 have reached three periods' worth of rent, and the lease agreements for the stores in question are therefore terminated.” As of the filing date, December 13, 2022, the defendant's rent arrears amounted to KRW 27,513,334, exceeding the three-periods amount of KRW 26,400,000.

The tenant's partial payment just before service of the complaint

On December 26, 2022 — before the copy of the complaint was served on the defendant — the defendant paid the plaintiff KRW 8,000,000 in rent, as a result of which the rent arrears fell below the three-periods amount of KRW 26,400,000. The copy of the complaint was served on the defendant the following day, December 27, 2022.

2. Issue and applicable law – Article 10-8 of the Commercial Building Lease Protection Act

The central issue was whether, where the tenant unilaterally pays part of the rent between the time the “three periods of rent arrears” requirement is met and the time the landlord's declaration of termination is delivered — bringing the arrears below three periods' worth — the landlord's right to terminate the commercial lease has already arisen and continues, or is instead reassessed and extinguished as of the time the termination right is “exercised.”

Commercial Building Lease Protection Act, Article 10-8 (Rent Arrears and Termination)
Where a tenant's rent arrears reach three periods' worth of rent, the landlord may terminate the contract.

3. The lower court's decision – Busan District Court, 2024Na46880

The lower court (Busan District Court, judgment of November 28, 2024, 2024Na46880) held that, once the defendant's rent arrears had reached three periods' worth of rent and the plaintiff's termination right had thereby arisen, even if the defendant thereafter paid part of the rent so that the arrears no longer reached three periods' worth, the plaintiff's termination right could not be regarded as extinguished unless the plaintiff could be seen as having impliedly waived it — for instance, by accepting the subsequent rent without objection (see Supreme Court, judgment of October 22, 1991, 91Da22902). And because there were no circumstances indicating that the plaintiff had accepted rent without any objection after the arrears reached three periods' worth, the plaintiff's termination right could not be regarded as extinguished; the court therefore held that the commercial building lease was lawfully terminated on December 27, 2022, when the copy of the complaint was served on the defendant.

4. The Supreme Court's decision – appeal dismissed, lower court upheld

Governing principles – distinguishing the requirement for the right to arise from the requirement for its exercise

The Supreme Court clearly organized “whether the tenant's rent arrears have reached three periods' worth of rent” under Article 10-8 of the Commercial Building Lease Protection Act as a requirement for the termination right to arise. Its reasoning was as follows.

① (Immediate arising) The moment the rent arrears reach three periods' worth of rent, the landlord's right to terminate the contract arises immediately.

② (Reference point in time) Whether the arrears reach three periods' worth of rent is not to be reassessed as of the time the declaration of termination reaches the tenant, i.e., the time the exercise of the termination right takes effect.

③ (Survival of the termination right) Accordingly, where a landlord exercises the commercial-lease termination right on the ground of arrears of three or more periods, so long as there were arrears of three or more periods at the time of exercise, the landlord's right to terminate is not extinguished, absent special circumstances, even if rent was unilaterally paid without the landlord's consent — bringing the arrears below three periods' worth — before the copy of the complaint stating the declaration of termination was served on the tenant.

Application to the case

Applying the above principles, the Supreme Court held that: ① even though the defendant paid KRW 8,000,000 in rent before the copy of the complaint stating the plaintiff's declaration of termination of the commercial lease was served on the defendant, ② because there were no circumstances indicating that the plaintiff thereafter accepted rent without any objection, the plaintiff could not be regarded as having impliedly waived the termination right; ③ the plaintiff's termination right therefore could not be regarded as extinguished; and ④ the lower court's determination that the commercial building lease was lawfully terminated when the copy of the complaint was served on the defendant was proper. In conclusion, the Supreme Court dismissed the defendant's appeal.

5. Practical implications

From the landlord's perspective – managing the timing of three-periods arrears and executing the declaration of termination

Through this Supreme Court judgment 2024Da320215, it has become clear once again, from the standpoint of a commercial-lease landlord, that “the termination right arises the very moment three periods of rent arrears occur.” A landlord should accurately track the tenant's rent-payment history over time, fix the point at which the arrears reach three periods' worth, and then take care not to “accept without objection” any partial payment the tenant makes thereafter. If the landlord continues to accept rent without objection, this may be evaluated as an “implied waiver of the termination right,” so where necessary it is safer to make clear a reservation of objection upon receipt, or to execute the declaration of termination early.

From the tenant's perspective – a later payment just before service of the complaint is unlikely to prevent termination

Conversely, from the standpoint of a commercial-lease tenant, it has been confirmed that merely paying part of the rent just before service of the complaint, after three periods of rent arrears have already occurred, is in principle unlikely to extinguish the landlord's right to terminate. The best course for a tenant is to manage matters in advance so as not to reach a state of three periods of arrears; and if arrears unavoidably arise, the tenant should secure an agreement with the landlord — such as a grace period or a reduction — or establish grounds that could be evaluated as an “implied waiver of the termination right,” for example by securing circumstances showing that the landlord accepted rent without objection.

Cheongchul Law Firm is composed of attorneys with extensive experience representing both landlords and tenants in lease-related litigation under the Commercial Building Lease Protection Act, the Housing Lease Protection Act, and related statutes. If you need advice or litigation concerning commercial-lease termination on the ground of three periods of rent arrears, a claim for delivery of a building, a claim for restitution of unjust enrichment, or commercial-lease renewal, rent reduction, or eviction, please do not hesitate to contact Cheongchul Law Firm.